Verizon's CEO said recently that it would be "pretty easy" for the nation's largest carrier to switch to or add a no-contract pricing structure, so long as customers appeared to be interested in such an offering.

Verizon's Lowell McAdam (right) with Google's Eric Schmidt

T-Mobile recently made headlines in wireless industry news, abandoning the traditional subsidized smartphone and carrier contract model for a payment structure that has customers paying more up front for their handsets and less as time goes on. Speaking last week at an event in New York, Verizon CEO Lowell McAdam said the move was interesting and that he'd be paying attention to how T-Mobile fared in the future.

"I'm pretty happy when I see something different tried," McAdam said, according toCNet. In addition to keeping an eye on T-Mobile's progress with the model, McAdam said that it would be "pretty easy" for Verizon to move to a no-contract structure if its customers looked like they'd be interested in such.

"We can react quickly to consumers' shifting needs," McAdam said.

McAdam spoke at an event aimed at promoting Verizon's push to encourage development of education, health care, and environmental sustainability apps that run on Verizon's network.

Verizon, AT&T, and Sprint ? the three carriers ahead of T-Mobile in terms of subscriber base ? all offer subsidized smartphones with one- or two-year contracts. Customers are able to get new phones without a contract, but doing so requires that they pay the full price of the handset up front, and none of the carriers heavily promote that option.

Coverage of T-Mobile's no-contract announcement was mixed, with many outlets noting that the arrangement would save consumers between several hundred and a thousand dollars over the span of a typical two-year contract. Others were more skeptical, saying that the need to pay for a phone in full simply puts a different name on the standard carrier contract model.

The T-mobile plan would not save someone like me as I typically upgrade every two years, however for someone like my wife it would make a big difference in year 3 as she typically gets every third model. I am considering testing t-Mobile when my kids cell contract is up. I'll get a real world test of their coverage in my area and there is no penalty if it does not work out.

To me a 2 year contract is a better deal as long as your staying with the carrier you started off with.

Which for 99% of the time is true for me.

Just do your research before you buy as there are ups and downs with every network.

Sure, I can't switch iPhones for 18 months but even with t-mobile's plan, you will pay for the upgrade.

Nice to see new options though.

How is a two year contract better? Setting service quality aside, the price of the subsidy is more expense then T-Mobile's plans even when you add in the monthly phone option. Moreover, being able to leave is always better. It keeps the carrier honest.

I would rather pay full pop up front for an iPhone (like I did with my 4g iPad) then get a reasonable priced month to month data plan. T-Mobile deal is still a 2 year contract, it just shifts contract to hardware & basically same price as a good carrier 2 year contract

The T-mobile plan would not save someone like me as I typically upgrade every two years, however for someone like my wife it would make a big difference in year 3 as she typically gets every third model. I am considering testing t-Mobile when my kids cell contract is up. I'll get a real world test of their coverage in my area and there is no penalty if it does not work out.

If you are on Sprint, AT&T or Verizon, I don't see how. If you choose payments over two years, you are going to pay $20 a month on top of your T-Mobile bill. So if you get the cheapest unlimited plan, which is $50 a month, you are paying $70 a month total. You pay less down, $99 dollars, and the phone only costs $580 as opposed to the full retail price of $650. Even if you want a new phone every two years, the entry price of the phone is cheaper ($99 as opposed to $199) and the price of the plan is cheaper even including the phone subsidy. T-Mobile's family plans even become a better deal, unlimited plans starting at $80 for two lines.

I have priced every major networks plans, and even with installment payments of the phone added into the plan, it is still cheaper on T-Mobile.

I would rather pay full pop up front for an iPhone (like I did with my 4g iPad) then get a reasonable priced month to month data plan. T-Mobile deal is still a 2 year contract, it just shifts contract to hardware & basically same price as a good carrier 2 year contract

With most carriers you are entering into one long term contract that covers the phone and service. With T-Mobile you are entering into two contracts. One is a month to month service contract, and the other is a contract for the sell of the phone. The phone contract is only a two year contract if you choose to take two years to pay it off. If you pay it off in two months, it is a two month contract. For what it is worth, you would probably be foolish not to take the two years as T-Mobile is essentially giving you a zero percent loan. Put your money to work somewhere else.

If you think you will be using it for 2 years anyway, then a contract is usually the better deal. Data is definitely more expensive on pay as you go.

Yes, but T-Mobile's plans aren't pay as you go. They are monthly unlimited no contract plans. Every month the contract renews unless you cancel. Show me an AT&T, Sprint, or Verizon contract plan that includes unlimited voice, texting, hotspot, and something resembling unlimited data for $50 a month ($70 if you included the phone). Good luck.

How is a two year contract better? Setting service quality aside, the price of the subsidy is more expense then T-Mobile's plans even when you add in the monthly phone option. Moreover, being able to leave is always better. It keeps the carrier honest.

Well follow my plan.

I upgrade every 2 years. My bill is the same whether I upgrade or not.

If I stay with the same carrier which I have for the past 4 years then I only pay 199$ for 16 gig iPhone

If I understand the t- mobile plan it's 99$ upfront plus 20$ per month for 2 years.

EDIT-"I have T-mobile figures wrong corrected many times over in other posts"

So for me it's cheaper.

EDIT-"I upgrade every 2 years and don't switch service plans as I have a major discount where I am 60$ a mo."

T-mobile may have cheaper plans data and service wise but with that I would just compare the pros and cons individually between the companies.

Id rather not risk jumping ship for saving a few bucks on that issue.Edited by StephanJobs - 4/8/13 at 11:06am

Based in London, I seem to have more choices than I can count (or shake a stick at) when I comes to upgrading my iPhone. However, I am staying with the strategy I adopted when iPhone 4 came out and that's buy the device outright and go with a month-by-month contract. In practice, I have not exercised my right to switch from Vodafone to SomeOtherCarrier %u2013 but it's nice to know I can.

is a two year contract better? Setting service quality aside, the price of the subsidy is more expense then T-Mobile's plans even when you add in the monthly phone option. Moreover, being able to leave is always better. It keeps the carrier honest.

One can always leave, it's just a contract not a gun to your head. Most people upgrade every 2 years so instead of a carrier subsidy you'll have a perpetual self imposed subsidy and service quality is exactly the reason AT&T and VZW have so many customers.

"Few things are harder to put up with than the annoyance of a good example" Mark Twain"Just because something is deemed the law doesn't make it just" - SolipsismX

One can always leave, it's just a contract not a gun to your head. Most people upgrade every 2 years so instead of a carrier subsidy you'll have a perpetual self imposed subsidy and service quality is exactly the reason AT&T and VZW have so many customers.

That's what I was thinking. Sprint and T-Mobile have always been "value" carriers compared to Verizon and AT&T.

Yet Verizon and AT&T have 2 to 3 times as many subscribers. I wonder why...

Maybe you do get what you pay for

I think it's great that T-Mobile is trying something new in the US. The no contract thing is nice... but you now have to buy your phone outright. And your monthly service will be cheaper on T-Mobile... but you may have poorer coverage.

Lower monthly payments, and it would expose the farce that is android costumer support and how carriers + OEMs [don't] handle updates.
For most fandroids software updates don't matter because they have the galaxy S for x months until the note comes out, then they buy the new galaxy S, etc.

It would be great for Apple to invest more in Europe (+stores, +apps, + brand support) and price their devices accordingly. (700 euros for a phone? No.)

Agreed. My brother in law bought a Samsung Galaxy (3 or 4) today (he knows nothing about phones), but he did ask me how much an iPhone costs about 3 months ago. I just knew when I saw that phone that he bought it because the iPhone 5 was too expensive. He asked me "is that a good phone?" when I had the phone in my hand, but the first thing I noticed was very pixelated anti-aliased text at the bottom of the screen. I was think Oh, WTF!?, but I played it cool and said I didn't know what type of phone it was. "Jesus I don't know what phone it is, what is it a galaxy?"

When he went off I thought I should have said why didn't you get an iPhone? But I guess I knew the answer. I guess I was half thinking I wonder if the guy in the shop pushed it on him? I'm thinking the brother in law knew my answer was quite political. I could have just as easily vomited over the phone in reply to his question. It really was plastic, cheap feeling junk.Edited by Ireland - 4/7/13 at 6:45pm

These are the prices of every manufacturer's high-end phones whether you pay all at once or over 24 months. There are many cheaper Android and Windows phones, but I just listed the high-end ones.

The question is: how can anybody say that the iPhone is much more expensive than the competition? For the small premium that you have to pay for the iPhone, you get so much more in terms of quality, service, resale value, ecosystem, and so on.

If people think Samsung or Google will win over Apple, they are dreaming.

You're basically getting an interest-free loan on a $650 phone spread out over two years... versus paying the $650 in one lump sum up front. That's a big deal to some people.

If you're gonna stay with the carrier anyway... why not let them finance the phone?

And with T-Mobile's new plans, you're literally (not basically) getting an interest-free loan on a $650 phone (that you're actually paying $580 for). That's exactly what it is, it's part of the deal, and it's called the Equipment Installment Plan.

If people would only spend 5 minutes reading up on these things before giving their opinions on them, these threads would be much shorter.

Plus... how often would people change carriers if they could? Every 6 months? That would be a hassle... porting your number and such.

There are other advantages as well. For example, if T-Mobile comes out with a new plan which is a better deal than the one you currently have, or if you decide you need a bigger plan with more GB per month, or if finances get tight and you need to downgrade to make ends meet, you are free to change it at any time. Plus, you're able to get a new phone whenever you want, just by paying off whatever balance remains on your current EIP (that interest-free loan that we talked about above).

Plus, it's just nice to know that if you ever move somewhere where your carrier doesn't work, you're not completely screwed.

Quote:

Originally Posted by StephanJobs

Well follow my plan.

I upgrade every 2 years. My bill is the same whether I upgrade or not.

If I stay with the same carrier which I have for the past 4 years then I only pay 199$ for 16 gig iPhone

If I understand the t- mobile plan it's 99$ upfront plus 20$ per month for 2 years.

That's 340$ for the phone.

So for me it's cheaper.

That's actually $580 for the phone. Whoops! Also whoops in that you're missing a crucial fact, which is that contract plans include that extra cost, usually around $20 per month, to subsidize the phone price. It's just that that subsidy payment is baked into the plan price, instead of itemized separately. In other words, T-Mobile's honest about it. No way are you only paying $200 for that phone — that's less than it costs Apple to even make it ($207), let alone profit margins.

On your other carrier, what you're really paying for the phone is $199 + $20/mo for 2 years, which comes out to $680. This is more than the phone's off-contract price of $650 — i.e., it's a rip-off. Add in that the contract plan is significantly more expensive even besides the subsidy payments, and you'll just about always spend a lot more on AT&T or Verizon than you will on T-Mobile.

Contract plans are for people who can't manage fifth grade arithmetic.

Of course going contract free is easy...its just anything but free. You pay for the phone up-front or in installments and still pay full price for the monthly contract. I highly doubt they will reduce their voice, messaging and data fees for monthly contracts. Don't think so? Verizon has a history of "screwing" their customers...41.4% profit margin and its still not enough, oh you were paying $30 for unlimited data...well now you pay $30 for 2GB, you want data sharing plan...ok give us more money, we'll give you less data and you can share between all your devices...great for investors but not for customers.

Considering the spectrum diversity domestic and international coupled with a vague "less over time" comment, I'll reserve hope until I see the voice and data plan prices and what bands are covered. I was tmobile once when half my life was spent in the (now) EU and the always AP; I would certainly return. Back then I had to have 2 phones.

Based in London, I seem to have more choices than I can count (or shake a stick at) when I comes to upgrading my iPhone. However, I am staying with the strategy I adopted when iPhone 4 came out and that's buy the device outright and go with a month-by-month contract. In practice, I have not exercised my right to switch from Vodafone to SomeOtherCarrier %u2013 but it's nice to know I can.

I too pay upfront for the iPhone (€873 incl. VAT, 64GB) and have the freedom to switch when I want to, or disable data if I'm out of the country for a month. In the end, I pay less than on a 2-year contract. And I get to sell my phone every year so I can get the latest version every time. Which now is easier than when on contract. Oh, and welcome to the forum.

Quote:

Originally Posted by Tallest Skil

^ picture

Schmidt holding a Zune? Good one

Quote:

Originally Posted by seeknemo

Of course going contract free is easy...its just anything but free. You pay for the phone up-front or in installments and still pay full price for the monthly contract. I highly doubt they will reduce their voice, messaging and data fees for monthly contracts. Don't think so? Verizon has a history of "screwing" their customers...41.4% profit margin and its still not enough, oh you were paying $30 for unlimited data...well now you pay $30 for 2GB, you want data sharing plan...ok give us more money, we'll give you less data and you can share between all your devices...great for investors but not for customers.

All telco's have a history of screwing with their customers. In the US, a bit more, I'd say. Oh, and welcome to the forum.

Contract plans are for people who can't manage fifth grade arithmetic.

Maybe this new "no contract" plan will help T-Mobile.

Prior to that... T-Mobile has always offered competitive prices compared to "expensive" carriers like Verizon and AT&T... yet their subscribership is small. T-Mobile has been the 4th place carrier (out of 4) in the US for quite a while.

It's not just basic arithmetic that kept people away from T-Mobile... it was coverage and phone selection.

I guess it depends on where you live... but I know very few people who have T-Mobile.

The people I know that do have T-Mobile... went there purely on price. But I've never heard them say anything particularly good about it.

Like I said... T-Mobile has always been cheaper than Verizon... so why aren't more people on T-Mobile?

Agreed. My brother in law bought a Samsung Galaxy (3 or 4) today (he knows nothing about phones), but he did ask me how much an iPhone costs about 3 months ago. I just knew when I saw that phone that he bought it because the iPhone 5 was too expensive. He asked me "is that a good phone?" when I had the phone in my hand, but the first thing I noticed was very pixelated anti-aliased text at the bottom of the screen. I was think Oh, WTF!?, but I played it cool and said I didn't know what type of phone it was. "Jesus I don't know what phone it is, what is it a galaxy?"

When he went off I thought I should have said why didn't you get an iPhone? But I guess I knew the answer. I guess I was half thinking I wonder if the guy in the shop pushed it on him? I'm thinking the brother in law knew my answer was quite political. I could have just as easily vomited over the phone in reply to his question. It really was plastic, cheap feeling junk.

I haven't checked current pricing, but the Galaxy S3 was roughly the same price as the iPhone 5. Some retailers might knock off $50-100 on sale for either, but I don't see how price would factor in between the two either on or off contract. Are you sure it wasn't a different model?

If you think you will be using it for 2 years anyway, then a contract is usually the better deal. Data is definitely more expensive on pay as you go.

It's all relative to the pricing structures available on the current market. Working in another country where pricing models are pay-as-you-go primarily, I can clearly see how ripped off the customer is in the USA. In China, you pay up front for the phone, yes that's expensive. But, the pricing structures for phone and Data is extremely lower than the USA. Voice and text and about 1/3 cent per minute and 1/2 cent per text. Data I paid about 3$ for 100 mb of data, 500 MB for about $8-$9. Everything is rechargeable from prepaid phone cards. Sure, there are monthly plains and annual plans as well, and they are fractions of what they are in the USA.

Sure, one could argue with 1.4b people there and its economy of scale, but a much smaller % of those people are actual cell phone users.

All I'm saying is that the prices are so overinflated in the US that even if the major carriers switched to PaYG, it's still a slap in the face to the customer. It really opened my eyes to see what just one other country does with phone/data service it really makes me feel like I should change my plan and get a feature phone. The sooner Apple can produce the iPod touch with 3G data and an all-data phone app the better off the customer will be and the less empowered the carriers will be.

I'm surprised to the few idiots here stating 2 year contracts are just fine... shouldn't be surprised though. I ask why? Why is a 2 year contract good? Being locked in? Paying same price regardless of device being "paid off". No wonder telco's get away with robbery, there's idiots like these hanging around. Yeah, this isn't a nice post but sometimes people need to be called out so they get their head out of their ass and actually pay attention to what's going on.

I upgrade every 2 years. My bill is the same whether I upgrade or not.

If I stay with the same carrier which I have for the past 4 years then I only pay 199$ for 16 gig iPhone

If I understand the t- mobile plan it's 99$ upfront plus 20$ per month for 2 years.

That's 340$ for the phone.

So for me it's cheaper.

T-mobile may have cheaper plans data and service wise but with that I would just compare the pros and cons individually between the companies.

Id rather not risk jumping ship for saving a few buck on that issue.

th phone is cheaper on a subsidized plan, but that's not the biggest cost over the run of the contract...it's the service. My iphone cost me $50 up front but it still pay $85/mo. On service for 2 years. That's $2,040 for two years. Compare that to a PaYG plan from anyone else. The Telco's put a premium price tag on the iPhone...including the service.

Ugh, this guy is such a tool. I've been waiting for all four of my family plan's phone contracts to expire (three non-smartphones and one iPhone) just to get off Verizon in NYC. No complaints about the reception but everything else about being a Verizon customer is like bamboo shoots under the fingernails. Already priced it out and it is much cheaper to go monthly elsewhere than stay with Verizon 2 year contracts, it's no contest. Don't know why people are saying it's cheaper because it's not. I've had a similar plan for multi phones for 15 years and with at least one smartphone for the last 6, and I can't wait to leave Verizon for monthly plans.

I think that a lot of people out there must be fools if they think that their phone only cost them $99 or $199 on contract. They're paying for the phone all right, they're paying out the ass for their phone over the period of their contract. Monthly mobile phone plans under contract in the US are ridiculously high, and I think that subsidized phones are a big part of the reason why. People are probably paying more than full price for their phone under contract. Apple and other companies make money from selling their phones to the cellular companies, and the cellular companies make money from you by charging ridiculous monthly rates.

I'd much rather just own something outright, instead of having it subsidized. We're not talking about buying a brand new car here or somebody who is trying to finance a house, it's just a damn phone.

I think that a lot of people out there must be fools if they think that their phone only cost them $99 or $199 on contract. They're paying for the phone all right, they're paying out the ass for their phone over the period of their contract. Monthly mobile phone plans under contract in the US are ridiculously high, and I think that subsidized phones are a big part of the reason why. People are probably paying more than full price for their phone under contract. Apple and other companies make money from selling their phones to the cellular companies, and the cellular companies make money from you by charging ridiculous monthly rates.

I'd much rather just own something outright, instead of having it subsidized. We're not talking about buying a brand new car here or somebody who is trying to finance a house, it's just a damn phone.

Fully agree. That's why I bought the iPhone online and use SIM-only instead of a subscription. Cheaper this way, and I can renew easily at every new model.

I think that a lot of people out there must be fools if they think that their phone only cost them $99 or $199 on contract. They're paying for the phone all right, they're paying out the ass for their phone over the period of their contract. Monthly mobile phone plans under contract in the US are ridiculously high, and I think that subsidized phones are a big part of the reason why. People are probably paying more than full price for their phone under contract. Apple and other companies make money from selling their phones to the cellular companies, and the cellular companies make money from you by charging ridiculous monthly rates.

I'd much rather just own something outright, instead of having it subsidized. We're not talking about buying a home here, it's just a damn phone.

True... part of your monthly bill is the subsidy. But it's not that much of it.

A 16GB iPhone, for instance, is $650... and you must pay $200 up front. The remaining $450 is spread out over 24 months... which works out to about $20 a month.

The biggest part of your phone bill is the service itself. You're right... that's where the carriers make their money.

I think the average monthly cell phone bill in the US is around $80 a month... so the carriers could be making around $60 a month... per customer.

And Verizon, for instance, has 100 million wireless customers.

No wonder Verizon has a 42% profit margin.

Now... they're not just sitting on all that money... Verizon spends billions every quarter improving their infrastructure. But still.

It's shocking to realize how much money they make... and how much we pay.

I prefer the contract free model, mostly because it encourages networks to compete openly on price. Every time I decide swap networks, I'm offered a stupidly good deal to stay. I'm currently paying less than $10 a month for 300 minutes, unlimited texts and unlimited data. Whenever I fancy buying a new iPhone, I go buy it direct from Apple.

I haven't checked current pricing, but the Galaxy S3 was roughly the same price as the iPhone 5. Some retailers might knock off $50-100 on sale for either, but I don't see how price would factor in between the two either on or off contract. Are you sure it wasn't a different model?